OP-ED | Casinos Revenue: Fruit of the Poison Tree
Keen observers of the gambling industry knew this day was coming. It was only a matter of time before a neighboring state opened resort casinos to compete directly with eastern Connecticut’s two cash-cow behemoths.
The speculation about the consequences has already begun, even though it’s only been two weeks since Massachusetts Gov. Deval Patrick signed legislation allowing for one full-scale casino each in eastern, southeastern and western portions of the Bay State. No doubt to the dismay of Connecticut officials, the latter two locations loom large as competitive threats to both Foxwoods and Mohegan Sun.
The state of Connecticut is in something of a bind here. Under a deal first negotiated in 1993 by former Governor Lowell Weicker with the Mashantucket Pequots and the Mohegans, the state receives 25 percent of gross slot machine revenues from the Foxwoods Resort Casino and Mohegan Sun. Last fiscal year, the two casinos combined to add $342.3 million to the state’s coffers — and that was down 2 percent from the previous year because of the economic downturn and increased competition in the state of New York.
Ironically, the casino resort proposed for down-at-the-heels Palmer, Mass., a few miles east of Springfield, is backed by Mohegan Sun. I guess the tribe’s executives figure if there’s going to be competition across the border, then gamblers might as well lose their money to Mohegan no matter which state the wagering occurs in. And the tribe is betting it’ll be worth the state-mandated $500 million investment in order to corner the market on the western Massachusetts action.
But state officials here don’t have that luxury. According to the Center for Policy Analysis at the University of Massachusetts, the eastern Connecticut resorts could lose as much as 20 percent of their customers as Bay State rivals open over the next few years. Of course, that doesn’t include state taxes paid by casino-goers on sales, hotels and gasoline. And unless the economy improves significantly over the next few years, this loss of revenue will come at a time of continuing fiscal hardship for Connecticut and its 169 struggling municipalities.
How does the state make up that revenue? Does the political will exist to make the necessary budget cuts to offset the impending loss of gambling-related revenues? Would it be reasonable to ask taxpayers to make further sacrifices after Gov. Malloy and the General Assembly just finished passing the largest tax increase in state history?
But more than anything, the growth in the gambling industry should make us stop and think about economic development and what kind of role gambling should play.
In announcing the new legislation, Gov. Patrick was cautiously optimistic, saying that “if done right, expanded gaming can create jobs, generate new revenue and spur economic growth in every region” of the state. Notice how the governor and other gambling boosters refer to that activity by its more benign-sounding synonym, “gaming.”
But is casino investment really economic development? Beyond a small group of executives, casino employees don’t make much money and the list of social ills spawned by expanded gambling is well known — to say nothing of the traffic and infrastructure demands visited on casino towns.
Maybe the construction of another neon and glass behemoth in New England will spark a much-needed debate about gambling and the government’s role in benefiting from it and promoting it. More specifically, beyond deriving revenue from casino gambling, should Connecticut — or any government, for that matter — run numbers games?
Every day across this nation, millions of low-income citizens, tempted by clever sales pitches, shell out their precious and hard-earned dollars to play in state-run lotteries. This is the height of governmental hypocrisy. Dozens of states that have successfully sued tobacco companies to recover health care expenses caused by smoking are themselves selling a product that can cause an equally ruinous addiction. I suppose I should be grateful that in its infinite wisdom the state of Connecticut sells Lotto tickets to the less fortunate while protecting them from the evils of Sunday liquor sales.
So notwithstanding the protestations of public officials, the voracious state government appears to have an interest in more casino gambling. Like addicts, lawmakers themselves have become dependent on gambling revenue after eating the fruit of the poison tree. And just like those zombie slot players players on a casino floor, everyone is likely to lose — except for those running the show.
Terry Cowgill blogs at ctdevilsadvocate.com and was an award-winning editor and senior writer for The Lakeville Journal Company.